The Importance of Better Economic Governance

As the world of economics goes through another shocking experience, this August, the importance of strengthening our National Economic Governance is even more highlighted. Unfortunately, too many in Malta, and politicians included, fail to understand that Government finance is our finance. It is not somebody else’s money, it is our money. Most times when Government over-spends, and in a democracy the tendency of elected representative is to spend now rather than save for tomorrow, few bother about the impact of over-spending on the national economy.

Indeed there are many pseudo economists who dominate certain sections of the media who still believe that spending is the way out for all problems, social, political and economic. Most times those who benefit from over-spending are the least productive or the very rich. The rest of us middle-income earners and business owners are the ones who have to pick up the bills, in increased taxation. It is always the same – they get, we pay.

Better Economic Governance rules imposed by the EU Commission now ensure that the EU 27 governments provide early Annual Budget proposals and Economic Consolidation Report to ensure that all preventive action is taken by Member States Governments to correct their economic imbalance and budget deficits. If the preventive measures are not considered sufficient by the EU Commission the European Council will dictate specific corrective measures for the member state to implement and if the Member State does not implement, their sanctions will become effective. This is an economic governance regime that the EU never had before. The problems that are now shaking the Euro Zone are also leading to other measures that lead to closer fiscal Union.

GRTU– Director General Vincent Farrugia as member of the EESC and as EESC Rapporteur on this issue is deeply involved in the talks and discussions on economic governance in representation of EESC ECO (Economic and Monetary Union, Economic and Social Cohesion) Section. He has participated in the European Economic Semester discussions in January and in the European Economic Congress in March and is participating in meetings and discussions on the evolvement of new economic policy measures being implemented since the crisis by the EU Commission.

These measures include:

· Strengthened surveillance – 6 pack

· European Semester – ex-ante guidance on economic policies

· Permanent Crisis resolution mechanism – European Stability Mechanism

· Europe 2020 – strategy for growth, employment and social cohesion

· Euro Plus Pact – improved policy coordination and competitiveness

· Financial repair – restructuring and stress testing

· Strengthening financial regulation

· European System of Financial Supervision – European Systemic Risk Board; European Supervisory Authority

In Malta however there are those who still believe that Budget is simply a Government give away so they present their wish-list and hope for the best. With nothing coming their way the Budget Day discussion becomes the usual Punch and Judy puppet show.

GRTU as a responsible national business organisation acts differently. We are currently involved in all extensive discussion with our various sections to identify new proposals that could stimulate our economy, increase productivity with intensive support of small businesses yet without negative impact on the national finances. The proposals that are coming in are interesting. Give us yours too – email on .